How Your Tax Refund Can Affect Your Credit!

Most taxpayers receive a refund when they file their taxes, merely because they paid more throughout the year than was due. Nevertheless, a tax refund can feel like a bonus paycheck when it comes in. A large sum of money at your disposal may offer you a unique opportunity to pay off some debt or make a smart investment to improve your credit.  

If you are delinquent on any of your payments, you may want to use your refund to catch up or pay off your debt. Debts can be paid in full, or you can negotiate a settlement with your creditors to work out a payment plan. After the debt is paid off or settled, you need to make sure the payment is reflected on your credit report. Paying off recent debt will be more beneficial to your score. You may also choose to pay down a loan with your refund. By doing so, you can reduce your monthly payment and possibly the term of the loan. 

Another way to increase your credit score is to build up your credit by making a smart investment. If you are in the market for a new car, you can use your tax refund as a down payment on your purchase. Hometown Auto offers quality vehicles with low down payment and affordable monthly payments regardless of your credit history. With a "buy here, pay here" program, you can begin to build a positive credit history to benefit your financial future. 

The best thing you can do with your tax return is to use it wisely. Spending it on a new TV or vacation might be appealing, but using it to improve your credit will benefit you in the long term. 

 

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